Get Martin's Free Money Tips Email!

What's my personal allowance?

Each of us has a 'personal allowance', which denotes the amount we can earn without paying any income tax. If you earn more than your personal allowance, then you pay tax at the applicable rate on all earnings above the personal allowance, but the allowance remains untaxed. Your specific personal allowance depends on your age and, in some cases, your salary.

What's my 2015/16 personal allowance?

Age

Earning bracket

2015/16 personal allowance

Born after 5th April 1948

Under £100,000

£10,600

£100,000 to £121,200

Decreases from £10,600 by £1 for every £2 you earn, until it reaches £0

Over £121,200

£0

Born between 6th April 1938 and 5th April 1948

Under £100,000

£10,600

£100,000 to £121,200

Decreases from £10,600 by £1 for every £2 you earn, until it reaches £0

Over £121,200

£0

Born before 6th April 1938

Under £27,700

£10,660

£27,700 to £27,820

Decreases from £10,660 by £1 for every £2 you earn, until it reaches £10,600

£27,820 to £100,000

£10,600

£100,000 to £121,200

Decreases from £10,600 by £1 for every £2 you earn, until it reaches £0

Over £121,200

£0

Extra allowances

Are you blind?

Your personal allowance + £2,290

The standard personal allowance will rise from £10,600 in 2015/16 to £11,000 in 2016/17.

Are you married or in a civil partnership?

If the answer to that is yes and both partners were born on or after 6 April 1935 then you may be entitled to the new Marriage allowance which allows couples to transfer a proportion of their personal allowance between them.

Alternatively, if at least one partner was born before 6 April 1935, then you can get a different married couples' allowance, which, despite its name, is also available to civil partners.

10% of this allowance is then subtracted from your annual income tax. If you were married before 5 December 2005, it is automatically worked out using the husband's salary. For couples married on or after 5 December 2005, it uses the highest earner's salary.

Born 6 April 1935 or before - married couples' allowance 2015/16?

Salary

2015/16 married couples' allowance

Under £27,820

£8,355

Between £27,820 and £38,090

Decreases from £8,355 , by £1 for every £2 you earn until it reaches £3,220

Over £38,090

£3,220

Once you know your allowance, work out 10% of it. You will receive this amount in tax relief.

What income tax band am I in?

Once you know your personal allowance, anything extra earned will be subject to income tax. For the 2015/16 tax year, there are three marginal income tax bands, including the 40% tax bracket and the 45% 'additional rate' bracket (also remember your personal allowance starts to shrink once earnings hit £100,000).

What is my income tax rate 2015/16?

Earnings

2015/16 rate

Under your personal allowance (PA)For most, £10,600

No income tax payable

Between PA and PA+£31,785For most, £10,600 to £42,385

20%

Between PA+£31,786 and £150,000For most, £42,386 to £150,000

40%

Over £150,000

45%

Marginal bands mean you only pay the specified tax rate on that portion of salary. For instance, if your salary puts you in the 40% tax bracket (over PA+£31,785 in 2015/16), then you only pay 40% tax on the segment of earnings in that income tax band. For the lower part of your earnings, you'll still pay the appropriate 20% or 0%.

There will also be a rise in the 40% tax-rate threshold to £43,000 in 2016/17.

Get Martin's Free Money Tips Email!

For all the latest deals, guides and loopholes - join the 10m who get it. Don't miss out

What's national insurance?

In addition to plain old income tax, most UK workers also have national insurance contributions deducted from their pay. These kick in based on your earnings from the age of 16, and you stop paying when you reach state retirement age.

What's my national insurance rate 2015/16?

Earnings

National insurance rate 2015/16 (For employed, NOT self-employed)

Per week

Annual salary

Under £155

Under £8,060

No national insurance payable

£155 - £815

£8,060 - £42,380

12% on everything earned between £155-£815/week

Over £815

Over £42,380

12% on everything earned between £155-£815/week, 2% on everything above that

Some advanced national insurance rules, particularly for the self-employed, are very complicated. See the HMRC website for full rates.

Capital gains tax

Capital gains is the least common tax on income, and for many it won't apply. However, if you sell or give away an asset worth more than £6,000, you could have to pay CGT. It doesn't apply for main homes, cars or lottery/pools winnings, among other things.

Each year, individuals have an annual exemption amount that allows them to receive some gains tax-free. Above this, you pay capital gains tax on all gains.

Capital gains tax in 2015/16

Annual exemption amount

£11,100 for individuals

Standard capital gains tax rate

18%

Higher capital gains tax rate

28%

Your rate of capital gains tax will depend on your other taxable income. See the HMRC website for more on how to work this out.

Paying into a pension?

Pension payments get very complex indeed, yet the basic thing to remember is that most people don't have to pay tax on the money they pay into their pension via their employer's PAYE system. Instead, the tax relief is used to top up your pension contributions.

If you aren't a taxpayer, then you'll be given an extra £20 for every £80 you pay into a pension up until you've contributed £2,880. This means the Government tops up your pension to £3,600.

However, there are some limits on the amount of tax-free contributions you can make (both in a year and over your lifetime).

Pension contribution limits 2014/15 & 2015/16

Annual tax-free contribution limit

£40,000

£40,000

Lifetime tax-free allowance

£1,250,000

£1,250,000

If you use the new pension freedoms to access your pension pot, then your annual allowance will drop to £10,000 for that year.

To check what your take-home pay should be, including pension contributions and student loan repayments, use the free Income Tax Checker.

Related News

What the * means above

If a link has a * by it, that means it is an affiliated link and therefore it helps MoneySavingExpert stay free to use, as it is tracked to us. If you go through it, it can sometimes result in a payment or benefit to the site. It's worth noting this means the third party used may be named on any credit agreements.

You shouldn’t notice any difference and the link will never negatively impact the product. Plus the editorial line (the things we write) is NEVER impacted by these links. We aim to look at all available products. If it isn't possible to get an affiliate link for the top deal, it is still included in exactly the same way, just with a non-paying link. For more details, read How This Site Is Financed.

How this site works

We think it's important you understand the strengths and limitations of the site. We're a journalistic website and aim to provide the best MoneySaving guides, tips, tools and techniques, but can't guarantee to be perfect, so do note you use the information at your own risk and we can't accept liability if things go wrong.

This info does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances and remember we focus on rates not service.

We don't as a general policy investigate the solvency of companies mentioned (how likely they are to go bust), but there is a risk any company can struggle and it's rarely made public until it's too late (see the section 75 guide for protection tips).

We often link to other websites, but we can't be responsible for their content.

Always remember anyone can post on the MSE forums, so it can be very different from our opinion.

MoneySavingExpert.com is part of the MoneySupermarket Group, but is entirely editorially independent. Its stance of putting consumers first is protected and enshrined in the legally-binding MSE Editorial Code.